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RBI raises cap on remittance on stable rupee

LiveMint 03-06-2014Joel Rebello

Mumbai: Reserve Bank of India (RBI) on Tuesday hiked the amount of foreign exchange that individuals can take out of the country to $125,000 in a fiscal year from $75,000 earlier.

In its monetary policy review, the central bank said the limit has been hiked “in view of the recent stability in the foreign exchange market.” There are no restrictions with regard to the end use of foreign exchange except for prohibited transactions such as margin trading, lottery and the like, RBI said.

The remittance limit was cut from $200,000 to $75,000 in August last year as the RBI tried to restrict the outflow of dollars after a steep fall in the rupee, which hit a record low of 68.85 per dollar.

The central bank also allowed foreign portfolio investors to trade exchange-traded currency derivatives to the extent of their underlying exposures and an additional $10 million “with a view to improving the depth and liquidity in the domestic foreign exchange market.”

Domestic entities have been allowed similar access to currency derivatives, RBI said, adding that detailed operating guidelines will be issued separately.

Non-resident Indians (NRIs) who were so far not allowed to take any Indian currency notes out of the country have been allowed to take out up to `25,000.

However, citizens of Pakistan and Bangladesh will still not be allowed to take any Indian currency out of the country.

Indian residents who were so far only allowed to take out `10,000 have also been allowed a higher limit of `25,000.

The move has been made “with a view of facilitating travel requirements of non-residents visiting India,” RBI said.